Darylâs Gifts desires to buy a new coding machine to helpcontrol book inventories. The machine sells for $36,586 andrequires working capital of $4,000. Its estimated useful life isfive years and will have a salvage value of $4,000. Recovery ofworking capital will be $4,000 at the end of its useful life.Annual cash savings from the purchase of the machine will be$10,000.

Required:

a. Compute the net present value at a14% required rate of return.

b. Compute the internal rate ofreturn.

c. Determine the payback period of the investment.

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Jean KeelingLv2

28 Sep 2019

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